AHDB European Market Survey

AHDB European Market Survey - 23 March 2012

For the second consecutive year, the EU was a
net exporter of fresh and frozen beef in 2011.

EU a net exporter of beef in 2011

For the second consecutive year, the EU was a
net exporter of fresh and frozen beef in 2011.
The previous year was the first time this had been
the case for many years. This was largely a result
of increased demand from Russia and Turkey,
combined with a reduction in imports from South
America. The trend in 2010 continued last year
as a result of a decline in world production and
the increase in global beef prices which made EU
beef more competitive. Since early 2010, rising
prices in the key South American exporting
countries have closed a large proportion of the
gap with EU prices. In addition cattle supplies in
the US are at record low levels and prices at a
historic high.

Exports of beef from EU Member States to external trading partners increased by more than a third
compared with 2010. A large part of the increase was the result of shipments to Turkey almost doubling,
following the reduction in tariffs since October 2010. However, as the year progressed shipments to
Turkey reduced and in the final quarter of the year exports of fresh and frozen beef were 80 per cent lower
than they were in the corresponding period of 2010. While increased shipments to Turkey was the main
driver, many other destinations also recorded significantly higher imports from the EU, including
Switzerland, Bosnia and Herzegovina and Macedonia.

For the year as a whole, shipments to Russia declined. However this is largely as a result of reduced
exports in the second half of the year. Demand from Russia was firm in the first
half of the year as global supplies remained tight and they took lower shipments
from a number of other markets including Brazil, Uruguay and Argentina. The strength of the rouble against the euro also helped to make EU beef more attractive to Russian importers,
especially as prices for South American beef continued to increase. However, reacting to the
Schmallenberg virus, Russia recently announced that it may extend its ban on the import of live cattle to
include beef.

In 2011, unit prices were nine per cent higher as there was increased competition to secure sufficient
product to feed the export market. This, combined with the surge in volumes, helped the value of EU beef
exports to exceed €930 million.

As well as higher exports of beef, shipments of live cattle from the EU were also considerably higher than
in 2010. Overall numbers were up by nearly a third at just over 800,000 head. Turkey took over 250,000
head of cattle compared with 54,000 head in 2010.

In contrast, EU Member States imported nine per cent less beef in 2011 as supplies from some South
American and African countries declined. The largest exporter of beef to the EU, Brazil, recorded a modest
increase in shipments compared to the year before. However the other two largest importers, Argentina
and Uruguay recorded declines of 11 and 18 per cent respectively. These were partly offset by increased
volumes sourced from the US, Australia and New Zealand as they sought to gain wider access to the high
value European market. The recent announcement by the EU Parliament approving an increase in the
volume of hormone-free beef exempt from tax may result in increased shipments from the US later in 2012.

With increased competition for limited global beef supplies, unit values for beef imported into the EU were
up 23 per cent year on year. As a result, the total value of imports increased by 11 per cent to €1.45
billion, despite the decline in volumes.